Geothermal energy needs to clear cost hurdles for viability

Courier Mail
Tuesday 26/8/2008 Page: 66

Geothermal energy could supply as much as 5 per cent of Australia's electricity needs by 2020 if development and cost hurdles can be overcome, a new study says. The report commissioned by the Australian geothermal Energy Association found producing power from underground heat could provide up to 2200 megawatts of continuous generating capacity by 2020. That would be up to 40 per cent of the nation's 2020 target for renewable energy use.

"This report highlights that the Australian geothermal energy industry has a potentially significant contribution to solving Australia's long-term climate change challenges," AGEA chairman Gerry Grove White said. However, the study found while the different elements of the technology such as drilling, fracturing, pumping, generating and reinjecting were all proven, the combination had not yet been demonstrated commercially in Australia.

"The inherently base-load nature of geothermal is a major advantage, but it needs to overcome developmental and cost-reduction barriers to realise its potential to become a major contributor to zero emissions generation," it said. Of the more than 30 companies actively involved in geothermal development, the reports said "even the most advanced ... (are) only now about to conduct closed loop circulation tests to reach the proof of concept stage".

However, Mr Grove White said the cost of generating electricity from geothermal resources was expected to fall rapidly as the sector progressed through pilot, demonstration and commercialisation stages to reach economies of scale by 2020. The cost would fall from $90 to $135 a megawatt hour (MWh) for small-scale demonstration plants of 10MW to 50MW down to $80/MWh to $110/MWh for large-scale plants of 300MW or greater. "The upper cost boundary will decline over time because the level of uncertainty is expected to narrow as the industry grows," he said.